Stock market

After a 219% rise, is there still value in Nvidia stock for investors?

Stocks in artificial intelligence (AI) darlings Nvidia (NASDAQ: NVDA ) has taken the market by storm. In the previous year, it is 219.1 percent higher.

But have investors considering buying shares today missed the boat? Given the attention the business is attracting, this is an important question I want to answer.

Is there any value left?

I want to see if there is any value left to get out of Nvidia’s share price today. There are a few ways I can go about this.

One is by looking at its price-to-sales (P/S) ratio. For Nvidia, it sits at 35.97. As we can see, it looks much more expensive when compared to some of its contemporaries that form the ‘Magnificent Seven’ e.g. Microsoft And Meta.

Created on Trading View

A comparison of its price-to-earnings (P/E) ratio also paints a similar picture. Nvidia has a trailing P/E of 73.73. This is more than three times. S&P 500 Average (23.3).

Created on Trading View

Talks of The bubble

Going up, I don’t see much value in Nvidia stock right now. Perhaps that is why there is talk of a bubble. There is a lot of hype around the business. Some think the risk is that retail investors are overvaluing Nvidia.

With this comes the possibility of large scale fluctuations. As a result, a handful of institutional investors are reducing their positions.

It keeps breaking it.

But should investors really be listening to the noise? The firm continues to beat expectations. What’s not to love about an incredibly high-performing company that is?

Its revenue rose 126 percent to $60.9 billion last year. In the last quarter, its sales grew by 265% overall. Business is expected to maintain this good form. By 2025, revenues are predicted to top $105 billion.

While analysts’ predictions shouldn’t be taken entirely seriously, some say the stock will rise to $971. This is a 10.3% premium to its current price of $880.

The AI ​​Revolution

Don’t get me wrong, I’m happy about the long-term outlook for Nvidia. The AI ​​industry will go from strength to strength in the coming years and decades, and businesses like Nvidia will be key drivers in shaping the sector.

Even so, I don’t find its value attractive at its current price. I own Nvidia shares so I’m not adding to my holdings right now.

The risk is that the stock is pulled back. Yes, he has posted impressive figures. But it will be impossible for the business to keep up with its current sales and revenue growth.

Some shareholders may have been so anticipatory that I’m aware we could see the stock bounce back at the first sign of any slowdown.

Nevertheless, I see attractive opportunities there for investors looking to gain exposure to the AI ​​revolution.

This includes some of the top names, such as Microsoft. Two other stocks that pique my interest. Scottish Mortgage Investment Trust And London Stock Exchange Group. I will be studying these companies in the coming weeks.


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